Tax Rules

Starting in 2013, pending further legislation, the capital gains tax will go up to 20%.

The qualified dividend tax rate is currently at a maximum of 15%, as are capital gains. Starting January 1, 2013, dividend tax rates will go up to the investor’s ordinary income rate.

There is a distinction between existing high capital gains exposure in a mutual fund verses future capital gains you expose yourself to.

“How can you respond if these new taxes are enacted? One option is to do a Roth conversion so that you can pay taxes now for those retirement funds.”

Q: I received a letter from a nonprofit organization to which I regularly donate suggesting I may be eligible for state tax credits. Can you please explain what this means?

Those productive small business owners with higher earnings are a different group from the ultra-wealthy with higher net worths.

Our country’s debt and deficit is difficult to understand in the abstract. Translating it to the numbers on each taxpayer’s credit card can help us see how our country’s spendthrift ways have debilitated economic productivity.

Tax credits are much more valuable than tax deductions. Deductions only reduce the amount you are taxed on. One dollar of deduction might only be worth 35 cents. In contrast, tax credits are a dollar-for-dollar reduction in your tax bill. And a refundable tax credit could mean the government will owe you money you never paid in the first place.

A professional tax expert can help you get the correct deductions. But he or she likely won’t motivate you to keep the right records unless you understand the benefits for yourself.

No one approaches financial planning with the goal of paying more taxes. Tax management, like all financial planning, is based on the premise that small changes made over time can achieve big goals.

A shortage of people are buying real estate and we’ve passed a one-per-customer tax incentive law.

Free markets are under assault in America. We have seen much hyperbole and slander in these past two years of political polarization. But the idea of capitalism and free markets has received more negative campaigning and vicious attack than both candidates combined.

Tax rebate stimulus checks are a cheap and inefficient gimmick.

The correct rate for the capital gains tax is zero, zip, nada. Perhaps it is even negative!

Use a 529 college savings account to save for college.

Below the line deductions are uncertain. Like many items in the tax code the correct answer to “Will they reduce my taxes?” is: “It depends.”

As Glinda advises us, “It’s always best to start at the beginning,” and at the beginning of the tax return is determining your filing status.

Most Americans look backward and only hope that Uncle Sam will return some of what they have already paid, but those with wealth look ahead and adjust their affairs according to the tax code.

Anyone of us could design a better system, but 500 congress people cannot resist the pressure groups who want to twist the code to benefit their particular constituencies.